Yahoo Inc owes a prize promoter $5.5 million for backing out of a contract to pay $1 billion for predicting every winner in the 2014 NCAA men’s basketball tournament, and entering a similar contract with Quicken Loans Inc and Warren Buffett’s Berkshire Hathaway Inc…
(Reuters) – Yahoo Inc owes a prize promoter $5.5 million for backing out of a contract to pay $1 billion for predicting every winner in the 2014 NCAA men’s basketball tournament, and entering a similar contract with Quicken Loans Inc and Warren Buffett’s Berkshire Hathaway Inc (BRKa. N) , a court decided on Monday.
The 5th U. S. Circuit Court of Appeals in New Orleans said SCA Promotions Inc was entitled to half of its $11 million contract with Yahoo as a cancellation penalty.
It rejected Yahoo’s claim that Dallas-based SCA improperly leaked the promotion to Buffett and Berkshire, while trying to line up insurance coverage for the grand prize.
Berkshire is well-known for insuring against potentially costly events with long odds, such as picking a perfect « March Madness » bracket, as the National Collegiate Athletic Association tournament is known.
« Any information that SCA disclosed to Berkshire Hathaway was not confidential information, » Circuit Judge Edith Brown Clement wrote for a three-judge panel.
Because SCA had kept Yahoo’s $1.1 million deposit, the appeals court on Monday awarded it another $4.4 million.
The decision reversed a lower court ruling ordering SCA to return $550,000 of the deposit to Yahoo.
« It has been a long battle over what we thought was a simple contractual provision, » Jon Patton, a lawyer for SCA, said in an interview. « We’re pleased the court of appeals got this right. »
Verizon Communications Inc (VZ. N) bought Yahoo’s internet business in June, and put it in a unit called Oath.
Charles Stewart, an Oath spokesman, said the unit does not discuss litigation.
Berkshire and Quicken announced their « Billion Dollar Bracket Challenge » three weeks after Yahoo and SCA signed their contract, and Yahoo quickly agreed to co-sponsor it.
No one won the top prize.
Berkshire now sponsors a bracket contest for its roughly 368,000 employees.
This year, a West Virginia factory worker won $100,000 for correctly choosing winners of the tournament’s first 29 games.
The case is SCA Promotions Inc v Yahoo Inc, 5th U. S. Circuit Court of Appeals, No. 15-11254.
